NO big baler experience but looks exactly like the same knotter as a 3 string baler.

Check your tension on the twine, if it's not tight enough it will "over spool" when the needles shoves the twine up for the next bale. (as already mentioned)

The bale strokes is slower than a small square but loose twine will do the same as the plunger cycles twine will "over spool" on each stroke. (W.A.G. would be 4-5 pounds pull to get the twine out of the box) 

The twine should be riding down in the groove in the twine/knife arm. (would need more pics to offer more help. 

As I said,, no personal experience with a big baler,, but knotter's are pretty much knotters.